American Apparel Investor Considers Paying Back Loan To Halt Continued Disputes

An American Apparel investor may pay off a loan for the troubled clothing maker, reports say. The company's founder, Dov Charney, refused to leave the CEO post after the Board ousted him, resulting in legal battles and disputes between the ex-executive and the Board. The loan by Lion Capital is said to be an attempt to stave off additional legal complications and lender jitters. Over the July 4 weekend, the retailer missed a repayment deadline on a $10 million loan. Lion Capital is demanding a list of explanations and guarantees from American Apparel's management. It wants to know what role will Charney play in the future and how much of American Apparel's daily operation is jeopardized by Charney's lawsuit. American Apparel's largest investor, New York based hedge fund Standard General, is considering paying back the loan from Lion Capital. It would also prevent legal disputes between the retailer and the lenders if more deadlines are missed. Charney has already agreed to give up his voting rights in the company, which he founded, but continues to refuse to walk away completely. It is unclear how long the negotiation will last.

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